John Rainey, United Airlines’ infamous CFO who claimed that elites are over-entitled, has put his foot in his mouth again…this time by trashing his company’s three-cabin international first class product, dubbed “Global First”. But it was not just a curious denigration…it was a fairly accurate statement and a sign that United does not see a three-cabin first class in its future.
Watch the video on bloomberg.com.
Rainey appeared on Bloomberg to bemoan high airline taxes in the USA but the issue of three-cabin first class came up. Citing American Airlines’ decision to eliminate international first class on many routes, he was asked whether United is considering a similar cutback. Rainey responded–
We’re moving more toward a two-cabin plane, with Economy Plus.
He then added–
It’s effectively the same service: you’ve got a very similar product, very similar seat, even the food service is very similar.
The direction that United is moving toward a two-cabin model is apparent enough: the new 787-9s, ordered post merger, will only offer two cabins of service, and the fact that United Global First is known by United employees and frequent flyers as “employee class” is just an illustration that few are willing to pay for first class.
While I admire Rainey’s brutal honesty, I question his decision to just rip any justification a customer on the fence might have for booking or upgrading to Global First. And his statement was not all totally accurate: while amenities and food are similar, the seat is not “very similar” – it is actually a tremendous improvement over both the legacy Continental and legacy United business class (“BusinessFirst”) seat.
While pre-merger United 777s and 747s have 2-4-2 seating in business class, first class is 1-2-1, with much more spacious seats that are wider, longer, and include all kinds of personal storage space (space that is glaringly lacking in business class). First Class, though not enclosed, is much more private, offers better bedding, and even a turn-down service with mattress pad.
Food is similar – the only difference between first and business class is hot appetizers, a soup course, and a better wine list ($20 bottles instead of $5 bottles). A very nice amenity kit is offered in Global First, a big upgrade to what passengers in business receive.
I’ve flown Global First twice this year – both last minute op-ups – once to Washington Dulles and once to San Francisco. I will note that on the SFO flight at least, service was significantly better than what I usually experience in business class.
So while the two cabins are accurately similar in the big scheme of things, I would think that a CFO would at least point out the benefits of Global First (with no plans to retire the 747 or legacy UA 777 fleet, Global First will be around for awhile) or at the very least make the case that United’s “BusinessFirst” already offers first class service.
> Read More: United Airlines Fights Their Iraq War
Here is what bothered me – I really think CFO Rainey did not know any better. I have been critical of the Continental team, led by CEO Jeff Smisek, for being openly hostile to pre-merger United and that was display in the interview. Listen to the CFO–
What we had when we merged Continetnal and United…uh…United had a three-cabin plane and we had a two-cabin plane…
He uses “we” throughout the interview, but clearly that we means Continental Airlines – not legacy United. Flyers and insiders still argue over whether the new United is “Continental doing business as [DBA] United” or “United DBA Continental” and this remark makes it even clearer that the Continental management team that took over United was not looking to innovate, but rather to obliterate what it deemed as an inferior, poorly-run airline.
* * *
Rainey also discusses taxes and fails to realize, or at least admit, why airline taxes are high.
In our industry, 16 or 17 taxes. I’m not talking income taxes. This is off the top line. There is a tax on fuel…a crushing tax burden…
He moans that taxes are higher than alcohol, tobacco, and firearms but what he fails to concede is the public infrastructure that airlines rely on – airports, security, and the FAA — all public entities necessary for the functioning of the airline. Of course taxes are going to be higher! That doesn’t mean I think the recent increase in the “9/11 Security Fee” is justified, but running an airline is not like running a brewery.
* * *
Rainey is worried about Gulf carriers like Emirates getting preferential tax treatment, and that is a fair concern, but a host of other problems come with state-owned and backed national airlines. That is not the U.S. model and everything comes at a cost. Perhaps if we had to start over again things would be done differently, but dropping taxes to Dubai levels is a non-starter in a country with competing privately-owned airlines and a crumbling national infastructure.
An interesting interview, but not one that gives me a great deal of confidence about the management leadership of United Airlines. UA could have a competitive first class product if it wanted to – I just wish it would try it and see what happens when it really tries to compete with Emirates, Singapore, and Lufthansa.